COMMODITIES : Grain, Soybeans Futures Up; Government Reports Larger Cattle Herds

Grain and soybean futures scored their first major advance in more than two weeks Friday and many other commodity markets followed suit, reversing a trend of generally falling prices.

But a surprising government report showing the nation’s cattle herd to be larger than many experts had predicted was expected to bring a sharp drop in cattle futures prices next week.

Livestock and meat futures settled mixed Friday ahead of that report.

On other exchanges, sugar, coffee and precious metals futures all rebounded; stock index futures advanced sharply, and most energy futures gained.

A basketful of bullish factors sparked a buying binge in grain and soybean pits of the Chicago Board of Trade.

“Mr. Excitement jumped in here today,” said Jerry Gidel, an analyst with G. H. Miller & Co. in Chicago.

Most corn and soybean futures soared their respective daily limits of 10 cents and 30 cents a bushel while the limitless August soybean contract gained more than 34 cents.

An overnight increase in cash corn prices spurred some hedge-type buying of corn futures by commercial grain dealers and processors, analysts said.

A rumor later in the day that the Soviet Union was in the market for corn prompted further buying of corn futures.

The depressed soybean market attracted bargain hunters early in the session. Then meatpacker Conagra Inc. released a prediction that this year’s U.S. soybean production would total 1.56-billion bushels, compared to the Agriculture Department’s latest estimate of 1.65-billion bushels, which added further support to the soybean market, Gidel said.

Less Chance of Rain

Wheat prices advanced on news of new export sales and on the USDA’s decision not to reduce from the current 10% the portion of their acreage that wheat growers must set aside to qualify for federal price supports.

“There had been a lot of talk of it going down to 5%, so that got the wheat market off to a good start,” Gidel said.

Private weather forecasts reducing the prospects for rain this weekend in the drought-stricken Farm Belt lent strength across the board, analysts said.

After the close, the National Weather Service issued several forecasts predicting warm and dry conditions in the Midwest next weekend, a mixed precipitation picture in the Farm Belt during August and above-normal rainfall in the region in September and October.

Wheat settled 10 cents to 18 cents higher, with the contract for delivery in September at $3.683 a bushel; corn was 6.25 cents to 10 cents higher, with September at $2.75 a bushel; oats were 7 cents to the limit 15 cents higher, with September at $2.715 a bushel, and soybeans were 9 cents to 34.5 cents higher, with August at $7.76 a bushel.

Livestock and meat futures finished mixed on the Chicago Mercantile Exchange ahead of the USDA’s semi-annual cattle inventory report, which was widely expected to show about a 2% reduction from a year ago in the nation’s cattle herd.

But the report showed the cattle herd to be down only 1%, at 107.9 million head, basically because of a 1988 calf crop that was larger than expected.

Thomas Morgan, president of Sterling Research Corp. in Arlington Heights, Ill., said the estimated calf crop of 40.2 million head indicated the bovine birth rate during the first half of the year was the third-highest in the past 17 years.

Expect Sharp Drop

“That’s where the biggest part of the surprise came in,” he said.

Prices of cattle for delivery next year have generally been rising on the assumption that this year’s drought will cut into next year’s cattle supply.

But analysts predicted prices of 1989 cattle futures would plunge on Monday because of the large calf number.

Live cattle were 0.15 cent to 0.55 cent higher, with August at 66.82 cents a pound; feeder cattle were 0.55 cent lower to 0.05 cent higher, with August at 79.45 cents a pound; hogs were 0.03 cent lower to 0.60 cent higher, with August at 43.87 cents a pound, and frozen pork bellies were 0.43 cent lower to 0.65 cent higher, with August at 30.52 cents a pound.

Sugar and coffee futures rebounded from three days of sharp declines in mostly technical buying on New York’s Coffee, Sugar & Cocoa Exchange.

September coffee settled 0.93 cent higher at $1.2472 a pound; October sugar was 0.72 cent higher at 11.54 cents a pound.

The inflationary implications of rising commodity prices, combined with a drop in Treasury bond interest rates gave precious metals futures a boost on New York’s Commodity Exchange, analysts said.

Gold settled $3.50 to $4.10 higher, with August at $436.10 an ounce; silver was 9.5 cents to 10.2 cents higher, with September at $6.855 an ounce.

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